Nepal–China ties tighten, but who gains?

Asia World

Author: Anil Sigdel, Nepal Matters for America

After upwards of 80 international trips, Chinese President Xi Jinping finally visited his South Asian neighbour, Nepal. The primary motive behind Xi’s visit was not China’s Belt and Road Initiative (BRI), but rather the US’s Indo-Pacific strategy. Despite the United States’ efforts, Nepal is hesitant to endorse the Indo-Pacific strategy. Meanwhile, Nepal signed a memorandum of understanding with China to cooperate on the BRI in 2017, but not a single BRI project has taken off in Nepal.

China's President Xi Jinping waves with Nepal's President Bidhya Devi Bhandari as the latter bids farewell, wrapping up his two-day visit to Nepal, in Kathmandu on 13 October, 2019 (Photo: Reuters/Mathema).

China's President Xi Jinping waves with Nepal's President Bidhya Devi Bhandari as the latter bids farewell, wrapping up his two-day visit to Nepal, in Kathmandu on 13 October, 2019 (Photo: Reuters/Mathema).

At the time of signing on to the BRI, Nepal’s ruling Communist Party seemed either unaware or deliberately downplayed the geopolitical implications of subscribing to China’s initiative that has gone on to challenge the US-led global order. Indeed, a year later, Nepal’s Foreign Minister Pradeep Gyawali was invited to Washington where Secretary of State Mike Pompeo offered Nepal a ‘central role’ in the US Indo-Pacific strategy. This was the first Nepal–US state visit of that level in 17 years.

In Nepal, the US Indo-Pacific strategy was immediately perceived as a strategy to use Nepal to contain China. For Nepal’s part, its long-standing endorsement of the ‘One China policy’, especially regarding Tibet, works as the foundation of a healthy relationship. Time and again, Nepal has come under pressure to provide a safe passage for Tibetan refugees to India — a long-standing US policy priority in Nepal. In this regard, the US Indo-Pacific policy has only amplified traditional concerns.

The Indo-Pacific strategy was not welcomed in Nepal for two additional reasons.

First, the ‘Indo’ part of the strategy that refers to India’s role in Asia is at odds with Nepal’s strong desire to reduce its dependence on India. Perhaps the strongest reason why there is support for China in Nepal, including among politicians, bureaucrats and members of the press, is Nepal’s experience with India.

Endorsing the US strategy would risk Nepal shooting itself in the foot by indirectly supporting Indian dominance in South Asia. It also feeds into Nepal’s fear that acquiescing to such pressures may destabilise the country. To be sure, India’s vision of the region differs from the US Indo-Pacific version and India–US relations are multilayered. Yet, India’s vision ensures that it remains the pre-eminent player in South Asia.

Second, while the United States and other liberal democracies and organisations have pursued the promotion of democracy and human rights in the international community, some of their policies, particularly on ethnic politics and secularism, have caused misunderstandings. Most Nepalese believe that external pressures in these areas have undermined Nepal’s identity and compromised its economic growth and development.

Meanwhile, building upon their long-standing friendly ties, China has cautiously extended its arms to Nepal in order to gain goodwill. China offered financial aid to Nepal’s security bodies to enhance cooperation and has cemented party-to-party relations by increasing interactions, visits and financial aid for development projects.

Nepal–US diplomacy appears to be under stress despite the United States being a major partner of Nepal’s communist government. Nepal’s government has yet to officially accept a US$500 million grant from the US Millennium Challenge Corporation (MCC) that has already been signed by both countries but was later tied to the Indo-Pacific strategy. Moreover, per the MCC conditions, for the agreement to enter into force, Nepal must obtain Indian consent on operational and financial details in order to fund a cross-border transmission line between Nepal and India. This only reinforces Nepal’s apprehension towards the US Indo-Pacific strategy.

Some argue that the main issue is that radical constituents of Nepal’s ruling party blocked the parliament from moving forward with endorsing the MCC grant. Despite Nepal’s policy of ‘amity with all and enmity with none’, experts in Kathmandu are concerned that the country is becoming too politically correct when it comes to China and that there is a lack of critical observation.

By building upon long-standing ties with the Nepali army and maintaining several diplomatic advantages over China, the United States remains in the game.

President Xi’s visit to Nepal comes as the country’s conditions are in China’s favour. Nepal’s current government is stable and, therefore, has a better chance of implementing agreements. Xi’s visit has also been taken by Nepalis as an elevation of Nepal’s stature in the international community, particularly given Nepali President Bidhya Devi Bhandari’s state visit to Beijing during the BRI Forum this year. During this visit, Xi also seized the opportunity at a now widely reported on press conference to warn ‘external forces’ that he believed to be seeking to divide China.

Most importantly, Xi and Nepali Prime Minister KP Oli agreed to elevate the Nepal–China relationship to a ‘strategic partnership’. This, arguably, immediately prompted a response in Washington as the acting Assistant Secretary at the Bureau of South and Central Asian Affairs Alice Wells commented that ‘Chinese influence has grown in Nepal’.

Nepali politicians should understand that growing ties with China must not lead to an undermining of the universal values of democracy and freedom. The international community must come to terms with the reality of China’s rise and how it will inevitably impact the trans-Himalayan order. This will require an understanding of Nepal’s interests and concerns.

Dr Anil Sigdel is Director at Nepal Matters for America, Washington DC.

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